Project ID: 34795

China Eximbank loans Angola $26.55 million for buyer’s credit loan for Huambo and Bié Agricultural School Construction Project (linked to #34030, #34773)

Commitment amount

$ 41456101.94

Constant 2017 USD

Summary

Funding agency [Type]

Export-Import Bank of China [State-owned Policy Bank]

Recipient

Angola

Sector

Education (Code: 110)

Flow type

Export Buyer's Credit

Concessional

No

Category

Intent

Mixed (The next section lists the possible statuses.)

Commercial

Development

Representational

Mixed

Financial Flow Classification

OOF-like (The next section lists the possible statuses.)

Official Development Assistance

Other Official Flows

Vague (Official Finance)

Flows categorized based on OECD-DAC guidelines

Project lifecycle

Status

Completion (The next section lists the possible statuses.)

Pledge

Commitment

Implementation

Completion

Suspended

Cancelled

Milestones

Commitment year

2007

2005-11-19

Planned implementation start

Completion

2008

2007-08-20

Planned

2008-02-08

Actual

Description

On 28 November, 2003, China and Angola signed a framework agreement pertaining to a special economic cooperation arrangement (Agreement name in Chinese: 中华人民共和国商务部与安哥拉共和国财政部关于两国经贸合作特殊安排的框架协议). Following the signing of the framework agreement, on 2 March, 2004, China Eximbank and the Government of Angola signed a $2 billion Master Loan Facility Agreement (MLFA). All of the subsidiary buyer’s credit loans approved through this MLFA carried the following terms: an interest rate of 3-month LIBOR (1.112% at the time that the MLFA was signed) plus a 1.5% margin- totaling 2.612%, a 22 year maturity period, and 5 year grace period (see linked Project ID#42029). According to the World Bank, this MLFA has a management commission fee of 0.3%, an installation commission fee of 1%; and an immobilization fee of 0.3% (See: Angola Public Expenditure Review (In Two Volumes) Volume II: Sectoral Review, p. 19).Sonangol provided a source of collateral for loans under the MLFA, and repayments were made with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which were deposited in an Angolan Ministry of Finance (MINFIN) account at China Eximbank (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 148). The volume of oil to be sold to UNIPEC each month for repayment of the loan varied according to market oil prices. Under the agreement, 70% of works have to be contracted with Chinese companies and the same proportion of construction material, equipment and labour has to be contracted in China (See: China’s Oil Diplomacy: Comparing Chinese Economic Statecraft in Angola and Brazil, p. 149).Then, in March 2005, China Eximbank and the Government of Angola signed a $41,006,416.61 subsidiary buyer’s credit loan agreement for the Huambo and Bié Agricultural School Construction Project (see project #34773) (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 278). The proceeds of this loan were used to partially finance a $45,562,685.12 commercial contract with Sinohydro, which was signed on 4 March, 2005 (See: UNCOVERING AGENCY: ANGOLA’S MANAGEMENT OF RELATIONS WITH CHINA, p. 278).Later on 19 July, 2007, China Eximbank and the Government of Angola signed a $500 billion Master Loan Facility Agreement (MLFA). All of the subsidiary buyer’s credit loans approved through this MLFA carried the following terms: an interest rate of 3-month LIBOR plus a 1.5% margin (or 6.86% at the time that the MLFA was signed), a 22 year maturity period, and 5 year grace period (see Project ID#34030). Under this MLFA, China Eximbank and the Government of Angola signed a $26.55 million subsidiary buyer’s credit loan agreement to support “complementary actions” related to the Huambo and Bié Agricultural School Construction Project. Project ID#34773 captures the first China Eximbank loan that supported this project, and this project captures the second China Eximbank loan that supported this project.The purpose of the project, which employed 98 Angolan workers and 41 Chinese workers, was to construct two agriculture schools: one in Ndango, Caála within Huambo Province and one in Andulo within Bié Province. The Huambo Medium Agrariam Institute has three two-story buildings each, which serve as dormitories, classrooms, and an administrative area. There are 15 residences for teachers, a cafeteria with the capacity for 150 people, a health centre, gymnasium, laboratories, a laundry, and kitchen, apart from areas of leisure and soccer fields. Outside the facility there are 30 hectares of land for practical lessons for students. The facilities are designed to accommodate 262 students. The facility has 22 classrooms. Overall, the school occupies over 10,000 square meters of land. In the Medium Agrarian Institute (Instituto Medio Agrario) of Bié, there are two classrooms for 50 students, an amphitheater for 30 students, a small classroom for language teaching, and a computer and laboratory room. There are also three offices, a library and a warehouse. In the classrooms there are chairs, benches, chairs and tables (See: Huambo: Education Minister Inaugurates Medium Agrarian Institute).The project was ultimately completed, according to Angola’s Ministry of Finance (See: Eximbank da China projectos Concluidos). A handover ceremony for the Andulo Agricultural Institute was held on 5 February, 2008. A school inauguration ceremony took place on 7 February, 2008 (See: Huambo: Education Minister Inaugurates Medium Agrarian Institute).

Additional details

The Portuguese project title is Construção de 2 Institutos Médios Agrários nas Províncias do Bié (Andulo) e Huambo (Caála). The Portuguese project title is Construção de 2 Institutos Médios Agrários nas Províncias do Bié (Andulo) e Huambo (Caála). The institute in Andulo is referred to as 安杜鲁农学院 or 比埃农学院 in Chinese, and the institute in Huambo is referred to as 万博农学院 in Chinese.In July 2020, AidData asked Dr. Lucy Corkin, a leading expert on Chinese lending to Angola, whether the second, third, and fourth master loan facility agreements (MLFAs) that the Angolan Government signed with China Eximbank in 2007 and 2009 were structured as a buyer’s credit loans like the first MLFA that the Angolan Government signed with China Eximbank in 2004. Dr. Corkin noted that the second, third and fourth MLFAs were treated more like ceiling increases to the initial facility. Therefore, for the time being, AidData categorizes the second, third, and fourth MLFAs as buyer's credit loans. Sinosure is also assumed to be involved in this loan facility as the 2003 framework agreement (中华人民共和国商务部与安哥拉共和国财政部关于两国经贸合作特殊安排的框架协议) specified that Sinosure will be signing relevant agreements with the Government of Angola, although the nature of the agreements is unclear.AidData considers this loan to be collateralized in a de facto sense. The cash desposited by the Angolan Ministry of Finance into a bank account controlled by China Eximbank is, for all intents and purposes, a source of collateral. This is true even if the lender does not have a formal security interest in the account.

Number of official sources

8

Number of unofficial sources

7

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Details

Cofinanced

No

Receiving agencies [Type]

Government of Angola [Government Agency]

Implementing agencies [Type]

SinoHydro [State-owned Company]

Accountable agencies [Type]

Loan type

Non-Concessional

Maturity

22 years

Interest rate

6.86%

Grace period

5 years

Management fee

0.3

Grant element

20.53162093%

Gurarantee provided

No

Insurance provided

Yes

Collateralized/securitized

Yes

Collateral

Sonangol served as the guarantor of the loans under the MLFA, and repayments were made with the proceeds of oil sales from Sonangol to UNIPEC (China international United Petroleum & Chemicals Co. Ltd, Sinopec group), which were deposited in an Angolan Ministry of Finance (MINFIN) account at China Eximbank.